(Adds information on restaurateur concept, share-price multiple.)
Chipotle Mexican Grill's
third-quarter earnings and revenue exceeded analysts' projections. Higher food costs were partially offset by an increase in restaurant sales.
¿ Revenue rose 24% to $592 million, above estimates of $584 million.
¿ Diluted earnings per share was $1.90, ahead of estimates of $1.85.
¿ Food costs were 33.1% of sales, an increase of 250 basis points, driven by rising commodity costs, yet in line with what management had given as guidance for the quarter.
¿ Chipotle opened 32 new restaurants, including the new ShopHouse Southeast Asian Kitchen, bringing the total restaurant count to 1,163.
¿ Restaurant-level operating margins were 26.7%, a decrease of 100 basis points from a year earlier.
¿ The company expects low-double-digit same-store sales growth for 2011, and low-single-digit same-store sales growth for 2012.
¿ The company plans to open 155 to 165 restaurants in 2012.
¿ Food costs should improve in the fourth quarter based on lower costs for avocados, the main ingredient in guacamole. The company is looking for low- to mid-32% range.
You have to be impressed by Chipotle. The company outmaneuvered rising food costs, proving it's still one of the few fast-growth restaurant stocks still available. It's growing sales at a rapid pace even after hiking prices by 4.5%.
I'm also a big fan of management's focus on grooming employees to become team leaders of owned stores. The restaurateur concept, which
recently termed a "competitive advantage for the chain," takes the best-performing managers and asks them to help advise on other chains while continuing to manage their original restaurant.
Based on EPS expectations for 2012 of $8.65, the stock is priced at around 36 times earnings. It's certainly not
, but given management's somewhat aggressive expansion plan, this is a stock that should continue to thrive over the next few years.
With the stock up 3% after hours, investors like what they see. I expect Chipotle to continue to deliver and would be a buyer on any weakness in the shares.
Feel free to let me know your thoughts on Chipotle either here or on Twitter at